4 - Life Insurance Premiums, Proceeds and Beneficiaries

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? -$1,000,000 -$500,000 -$250,000 -$0

$0

Which premium schedule results in the lowest cost to the policyowner? -Semi-annual -Monthly -Quarterly -Annual

Annual

When can a policyowner change a revocable beneficiary? -Anytime -After the consent of the current beneficiary -Never -Only if primary beneficiary dies

Anytime

On a life insurance policy, who is qualified to change the beneficiary designation? -Payer -Primary beneficiary -Policyowner -Insurer

Policyowner

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? -Tertiary -Irrevocable -Revocable -Contingent

Revocable

A policyowner is able to choose the frequency of premium payments through what policy feature?-Consideration -Payor benefit -Premium Mode -Assignment provision

Premium Mode

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? -Premiums are normally not tax deductible -Cash dividends are normally not taxed -Entire cash surrender value is taxable -Proceeds are received tax-free if there is a named beneficiary

-Entire cash surrender value is taxable

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? -Request will be accepted only if in writing by the insured -Change will be made only if premiums are paid current -Change will be made immediately -Request of the change will be refused

-Request of the change will be refused

A level premium indicates -the premium is fixed for a period stated in the contract, then becomes variable -the premium can only be changed with the consent of the insurer -the premium stays level until the policy's renewal date -the premium is fixed for the entire duration of the contract

-the premium is fixed for the entire duration of the contract

Which statement regarding the Change of Beneficiary provision is true? -The beneficiary can only be changed with the consent of the insurer -The policyowner can change the beneficiary -The insured can change the beneficiary -A beneficiary change is subject to underwriting procedures

The policyowner can change the beneficiary